Business rates U-turn ‘doesn’t answer the problem’

Roy Beers

Some of Forth Valley’s best-known hospitality businesses will no longer face astronomic rates increases, but more remedial action is needed.

That is the perspective from Forth Valley Chamber of Commerce chief executive Michelle McKearnon on a rates drama some argued would wreck the leisure economy.

Shock proposed rises in business rates fuelled a high profile campaign at all levels of the hospitality industry - from trade associations to a petition launched by a Falkirk operator - amid claims many businesses, particularly pubs, would be shut down.

Michelle McKearnon argues the underlying problem hasn’t been solved, and that a fundamental reappraisal of the system is badly needed.

In a random selection of ten Falkirk pubs Forth Valley Chamber of Commerce found seven were being hit with hefty rises, and one was being asked to pay an extra 82.1 per cent - from £21,000 to £38,250.

As in other areas of the country highlighted by the Scottish Licensed Trade Association there appeared no valid reason to justify such massive penalties, either in trading terms or rent values.

The Scottish Government initially played up the benefit to the many smaller-rated businesses (£15,000 or less) who from next year will pay no rates at all, but in the face of growing uproar from those worst affected then performed what was widely seen as an abrupt U-turn by bringing in a partial 12.5 per cent cap on rises in the north-east and the hospitality sector.

But with one crisis apparently averted - some financial sector accounts describe it as “a sticking plaster” - Michelle McKearnon argues a wider problem still needs to be addressed, which is how to remodel Scotland’s “outdated business rates regime”.

She said: “We welcome the Scottish Government’s recognition that this year’s business rates revaluation is causing major problems for a large number of Scottish businesses.

“This announcement of additional support measures for certain sectors and parts of the country are to be welcomed and will deliver much needed support when it is most needed.

“What it doesn’t do, however, is get to the root of the problem.

“That is why Scottish Chambers of Commerce has proposed a full expert review of the methodology of valuations in the hospitality, motor trade and energy sectors, with a view to ensuring that every business in Scotland can be confident that it is subject to a correct business rates valuation of its premises.

“This would complement the ongoing work of the Barclay Review of Business Rates, which is a more general and less technical appraisal of the system.”